Your IRA — whether it’s a traditional IRA, Roth IRA, or 401(k) — does not care what your will says. When you die, the money goes directly to whoever is named on the beneficiary form you filled out when you opened the account, even if that person is an ex-spouse, a deceased relative, or someone you haven’t spoken to in twenty years. This is one of the most expensive estate-planning mistakes retirees make, and it takes about ten minutes to fix.

Why does my IRA ignore my will?

Retirement accounts are what lawyers call “non-probate assets.” That means they pass outside of your estate entirely and skip the court process (called probate) that your will controls. The financial institution holding your IRA is legally required to pay out to whoever is listed on the beneficiary designation form — full stop. A judge cannot override it. Your family cannot argue around it. The form wins every time.

This matters more than most people realize. IRAs are often the largest single asset a retiree owns, sometimes worth more than the house. Leaving that asset misdirected — or leaving the beneficiary field blank — can trigger a messy, slow, and expensive legal process, and the money may end up in exactly the wrong hands.

How do I check and update my IRA beneficiary?

Log in to your brokerage or bank account and look for a section called “Beneficiaries” or “Account Settings.” If you can’t find it online, call the customer service number on your statement and ask them to mail or email you the current designation on file. You may be surprised — or alarmed — by what you see.

When you update the form, you’ll typically name:

  • Primary beneficiaries — the first people in line to inherit (usually a spouse, children, or both)
  • Contingent beneficiaries — the backup heirs if your primary beneficiaries die before you

Always name at least one contingent beneficiary. If your primary beneficiary dies before you and there’s no contingent named, the account may default to your estate, which drags the money into probate and can eliminate the valuable tax-stretching options your heirs would otherwise have.

Update the form after every major life event: marriage, divorce, the birth of a grandchild, or the death of someone previously named.

What happens to my IRA when I die — and what are the RMD rules for 2026?

Who inherits your IRA determines how fast they must withdraw the money and pay income taxes on it. Under the current rules (which took effect under the SECURE 2.0 Act and apply fully in 2025 and 2026), most non-spouse beneficiaries must empty an inherited IRA within 10 years of the original owner’s death. Spouses have more flexibility — they can roll the account into their own IRA and delay withdrawals based on their own age.

Required Minimum Distributions (RMDs) — the mandatory annual withdrawals the IRS requires once you reach age 73 — also affect inherited accounts. If you die after your required beginning date (April 1 following the year you turn 73), your non-spouse heirs must take annual RMDs during those 10 years, not just a lump sum at the end. Getting beneficiary designations right can mean the difference between your heirs spreading out the tax bill over a decade or being forced into a single enormous taxable withdrawal.

Should I name a trust as my IRA beneficiary?

Sometimes, yes — but only if it’s set up correctly. Naming a trust can make sense if you want to control how and when heirs receive money (for example, if a beneficiary has a spending problem, is a minor, or has special needs). However, a trust that isn’t specifically drafted to receive IRA assets can accidentally trigger the 10-year rule in the worst possible way, forcing rapid withdrawals and a big tax bill.

If a trust is on your radar, talk to an estate planning attorney who has specific experience with retirement accounts before you change anything. This is one area where a DIY approach can do real harm.

How do beneficiary mistakes connect to my broader retirement tax picture?

The beneficiary conversation doesn’t exist in a vacuum. The size of your IRA — and how quickly heirs must withdraw it — intersects with several other retirement tax issues you’re probably already thinking about.

For example, large IRA withdrawals can push your income above the thresholds that trigger Medicare IRMAA surcharges (the extra amount high-income retirees pay on top of the standard Medicare Part B premium, which is $185.00 per month in 2025). If your heirs are forced to take large inherited IRA distributions, those withdrawals count as ordinary income and could affect their own Medicare costs years down the road.

Similarly, up to 85% of your Social Security benefit can become taxable depending on your total income — and IRA withdrawals count toward that threshold. Careful beneficiary planning, combined with a smart Roth conversion strategy before you pass the account on, can reduce the tax burden for everyone involved.

Speaking of Social Security: if you haven’t yet claimed your benefit, know that claiming at 70 instead of 62 increases your monthly payment by roughly 77%. A larger Social Security check means you may be able to take smaller IRA withdrawals during your lifetime, leaving a bigger, better-structured account for your heirs.

What’s the single most important thing to do today?

Pull out a piece of paper — or open a notes app — and write down every retirement account you own: IRAs, 401(k)s, 403(b)s, old workplace plans you haven’t rolled over yet. For each one, find out who is currently named as beneficiary. Then ask yourself: Is that still the right person? Is there a contingent named? Is the form even filled out?

If the answer to any of those questions makes you uneasy, log in and update the form today. It costs nothing, takes minutes, and could save your family thousands of dollars and months of heartache.

Your will is an important document. But for your retirement accounts, the beneficiary form is the document that actually matters. Make sure it says what you mean.

FAQ

Frequently Asked Questions

When should I claim Social Security to maximise my benefit?

Claiming Social Security at age 70 gives you the largest possible monthly benefit — roughly 77% more than claiming at 62. If you’re in good health and have other income sources to cover expenses in the meantime, delaying to 70 is usually the smartest move. Claiming early locks in a permanently reduced benefit for the rest of your life.

How much of Social Security is taxable?

Up to 85% of your Social Security benefit can be taxable, depending on your “combined income” (adjusted gross income plus non-taxable interest plus half your Social Security). If your combined income exceeds $34,000 as a single filer or $44,000 as a couple, 85% of your benefit is subject to federal income tax. IRA withdrawals count toward this threshold, so distribution planning matters.

What are the RMD rules for 2025 and 2026?

Under the SECURE 2.0 Act, you must begin taking Required Minimum Distributions from traditional IRAs and most workplace retirement accounts at age 73. The IRS calculates your annual RMD by dividing your account balance (as of December 31 of the prior year) by a life expectancy factor from IRS tables. Missing an RMD triggers a penalty of 25% of the amount you should have withdrawn, reduced to 10% if corrected promptly.

How do I avoid Medicare IRMAA surcharges?

IRMAA (Income-Related Monthly Adjustment Amount) is an extra charge added to your Medicare Part B and Part D premiums if your income exceeds certain thresholds — in 2026, surcharges begin above $106,000 for single filers. You can reduce exposure by managing IRA withdrawals carefully, using Roth conversions in lower-income years, and timing large transactions to avoid income spikes. You can also appeal an IRMAA determination if your income has dropped due to a life-changing event.

What is the Medicare Part B premium for 2025?

The standard Medicare Part B premium is $185.00 per month in 2025, up from $174.70 in 2024. Higher-income retirees pay more due to IRMAA surcharges, which are based on income from two years prior — meaning your 2023 tax return determines your 2025 premium. Keeping your income below the IRMAA thresholds through smart withdrawal planning can save you hundreds of dollars per year.